Problem 9-4A Estimating warranty expense and liability LO P4 General Journal Inputs:

• Accounts payable
• Accrued payroll payable
• Bonus payable
• Cash
• Cost of goods sold
• Deferred income tax liability
• Earned services revenue
• Earned ticket revenue
• Employee benefits plan payable
• Employee bonus expense
• Employee fed. inc. taxes payable
• Employee life insurance payable
• Employee medical insurance payable
• Employee union dues payable
• Estimated warranty liability
• Federal unemployment taxes payable
• FICAMedicare taxes payable
• FICASocial sec. taxes payable
• Income taxes expense
• Income taxes payable
• Interest expense
• Interest payable
• Merchandise inventory
• Notes payable
• Payroll taxes expense
• Salaries expense
• Salaries payable
• Sales
• Sales salaries expense
• Sales taxes payable
• State unemployment taxes payable
• Unearned services revenue
• Unearned ticket revenue
• Vacation benefits expense
• Vacation benefits payable
• Wages expense
• Warranty expense

Record the sales revenue of 80 razors for $5,600 cash. Record the cost of goods sold for 80 razors. Record the estimated warranty expense at 6% of November sales. Record the replacement of 16 razors that were returned under the warranty. Record the sales revenue of 240 razors for $16,800 cash. Record the cost of goods sold for 240 razors. Record the replacement of 32 razors that were returned under the warranty. Record the estimated warranty expense at 6% of December sales. Record the sales revenue of 160 razors for $11,200 cash. Record the cost of goods sold for 160 razors. Record the replacement of 37 razors that were returned under the warranty. Record the adjusting entry for warranty expense for the month of January.

Required information Problem 9-4A Estimating warranty expense and liability LO P4 (The following information applies to the questions displayed below.] On October 29, Lobo Co. began operations by purchasing razors for resale. The razors have a 90-day warranty. When a razor is returned, the company discards it and mails a new one from Merchandise Inventory to the customer. The company's cost per new razor is $14 and its retail selling price is $70. The company expects warranty costs to equal 6% of dollar sales. The following transactions occurred. Nov. 11 Sold 80 razors for $5,600 cash. 30 Recognized warranty expense related to November sales with an adjusting entry. Dec. 9 Replaced 16 razors that were returned under the warranty 16 Sold 240 razors for $16,800 cash. 29 Replaced 32 razors that were returned under the warranty 31 Recognized warranty expense related to December sales with an adjusting entry. Jan. 5 Sold 160 razors for $11, 200 cash. 17 Replaced 37 razors that were returned under the warranty. 31 Recognized warranty expense related to January sales with an adjusting entry. Required information View transaction list Journal entry worksheet 2 3 4 5 6 7 8 ..... 12 Record the sales revenue of 80 razors for $5,600 cash. Note: Enter debits before credits. Date General Journal Debit Credit Nov 11 Record entry Clear entry View general journal 2. How much warranty expense is reported for November and December? Warranty expense for November Warranty expense for December 3. How much warranty expense is reported for January? Warranty expense Problem 9-4A Part 4 4. What is the balance of the Estimated Warranty Liability account as of December 31? Estimated warranty liability balance Problem 9-4A Part 5 5. What is the balance of the Estimated Warranty Liability account as of January 31? Estimated warranty liability balance